Interest rates on short-term T-bills declined.

The Treasury sold $7.4 billion in new three-month bills at an average discount rate of 5.38%, down from 5.53% last week. Another $7.4 billion was sold in new six-month bills at an average discount rate of 5.43%, down from 5.55% last week. The rates were the lowest since Nov. 24 when three-month bills sold for 5.35% and six-month bills averaged 5.39%. The new discount rates understate the actual return to investors--5.53% for three-month bills with a $10,000 bill selling for $9,864.00 and 5.66% for six-month bills selling for $9,725.50. The discount rate reflects the price discount received when government securities are purchased at less than face value.